Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of cowboy hats is $50, producer surplus is
A) $0. B) $4. C) $62. D) $138.
C
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Answer the following statement(s) true (T) or false (F)
1. Unlike a consumer, a competitive profit-maximizing firm faces no constraints. 2. Optimization typically requires use of the equimarginal principle. 3. A world in which most people are irrational would have to function much differently than a world in which most people are rational. 4. An economist uses a consumer's demand curve to express the solutions to a family of optimization problems. 5. Economic models of markets generally treat prices as exogenous variables.
Which of the following statements would appeal to someone who favors an expanded public sector as the basis of expansionary fiscal policy?
A. “The government isn’t the solution; it’s the problem.” B. “The government that governs least governs best.” C. “The American people want national defense; they want laws to be enforced; they want federal support for education and environmental protection, and they want transfer payments for the elderly and unemployed.” D. “If you ever got anything good out of the government you can be sure that some rich so-and-so got more.”
Refer to Figure 4-3. If the market price is $2.50, what is the consumer surplus on the first ice cream cone?
A) $0.50 B) $1.00 C) $3.50 D) $9.00
Refer to Figure 7-2. At the market equilibrium, the deadweight loss is equal to
A) $0. B) $500,000. C) $1,000,000. D) $2,000,000.